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The Commonwealth of Puerto Rico defaulted on $312 million in principal and interest due Feb. 1st by four credit-issuing entities, including constitutionally protected General Obligation bonds, the government confirmed Wednesday.
The Puerto Rico government’s decision to default on a portion of the $470 million in debt service payments due Monday drew reactions from politicians, analysts and creditors alike, who both urged Congress to act on the Commonwealth’s behalf and predicted long court battles ahead.
The government of Puerto Rico will default on several debt payments due May 2, including $422 million due from the Government Development Bank, “regardless of whether Congress enacts pending fiscal oversight legislation,” Moody’s Investors Service predicted.
Standard & Poor's Ratings Services said Wednesday the legislation enacted giving Puerto Rico Gov. Alejandro García-Padilla the power to suspend debt service payments would lead to a further credit downgrade, to “default” status.
A decision by the Puerto Rico government to make the $354.7 million payment on Government Development Bank Senior Notes due today will come down to the wire and will depend on the outcome on talks with creditors, Gov. Alejandro García-Padilla said.
Puerto Rico is facing better odds of defaulting on its debt, Moody’s Analytics said Monday, adding that fiscal problems, high unemployment rate and a shrinking population are fueling the problem.
Uncertainty over the impact of new taxes on businesses may be putting a break on entrepreneurship with Puerto Rico's largest bank reporting a slowdown in its small business loan activity.
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